event details - Provincial Taxation Reforms in Pakistan

Background

The provincial administrations have been entrusted with greater revenue mobilization responsibilities in a post?18th Amendment milieu. Apart from the traditional taxes under provincial jurisdiction (e.g. property, transport and agriculture taxes), the sales tax on services is also under the provincial domain. Some provinces have also requested to devolve the control over federal excise collections.

As provinces gear up to achieve greater control over resource mobilization, there are issues related to double taxation (at federal and provincial stages), lack of census of agricultural and property incomes, missing data on services sector establishments, and their turnover. Key reasons for these issues are:  a) fragmented structure of revenue mobilization at provincial level and b) weak capacity to plan forecast and audit the incomes base under provincial jurisdiction.

The provincial governments in Punjab and Sindh have undertaken a medium term exercise towards provincial revenue mobilization reforms. While both provinces are at different stages in the reform process There are, however, learnings which can be shared from both ongoing exercises.

Objectives of consultative meeting

SDPI is currently conducting brief situational analyses on the provincial tax reform efforts in Punjab and Sindh. In order to take stock of the current fiscal efforts, it is important to listen to the views of revenue authorities, business community, consumer groups and trade associations. It is also important to discuss how coordination can be improved between provinces and the center for reducing transactions and compliance costs faced by tax payers.

Expectations from the meeting

A key outcome of this meeting will be to increase public and political support for urgent reforms in tax policy and administration at provincial levels. Better communicated evidence can help the audience to understand constraints, challenges and entry points in tax reform. It is expected that the presence of informed individuals and organizations at this meeting will add to the understanding of public at large.

Key discussion areas

• Take stock of the current revenue administration structure in Punjab and Sindh provinces
• Provide a situation analysis on tax collected (including trends over time)
• Provide an overview of ongoing revenue mobilization reform initiatives in both provinces
• Provide a view from the business community if current taxes lead to higher transactions and compliance costs
• Provide a view from the consumer groups/associations  if  current  taxes  lead  to Welfare implications
• Assess how fragmentation across the revenue administration can be reduced and     if  any savings/surplus achieved)
• Any lesson learnt from provincial revenue mobilization reforms.

Project Lead:

Dr. Vaqar Ahmed Deputy Executive Director

Team:

Muhammad Adnan Research Associate
Fazal Bukhari  Researcher